Regulated vs unregulated SSAS investments
A SSAS offers unusually broad investment flexibility compared with most pension types. But "broad flexibility" is not the same as "anything goes." HMRC draws clear lines between permitted investments, investments that require care, and those that are outright prohibited. Trustees need to understand the framework before making investment decisions.
Permitted Investments in Detail
Listed shares and bonds
Shares listed on a recognised stock exchange — including the LSE, AIM, NYSE, NASDAQ, and other recognised markets — are straightforward permitted investments for a SSAS. UK and overseas government bonds and corporate bonds are similarly permitted. These are the most conventional investment assets and require no special structuring or HMRC approval.
Commercial property
Commercial property — offices, industrial units, retail premises, agricultural land, and development land for commercial use — is one of the most popular SSAS investments. The scheme can hold the property as a direct investment, charge market-rate rent to occupiers, and benefit from capital growth, all within HMRC's rules and free of Capital Gains Tax within the pension wrapper.
Cash
Cash held in a UK bank account in the SSAS's name is the simplest and most liquid holding. All SSAS schemes will hold at least some cash — to meet costs and facilitate investment transactions. Higher cash holdings can earn interest, which accrues within the pension wrapper without Income Tax deduction in most cases.
Connected loans (loanback to sponsoring employer)
A SSAS can lend money to the sponsoring employer under specific HMRC rules — this is the "loanback" or "loan from scheme to employer" facility. The rules are strict:
- Maximum loan: 50% of the scheme's net asset value at the time of lending
- Maximum term: 5 years
- Repayment: Equal annual instalments (20% of capital per year)
- Security: First legal charge on company or personal assets required
- Interest rate: Minimum 1% above the leading banks' average base lending rate
Within HMRC rules: The loanback is a loan from the scheme to the employer, not a withdrawal of pension funds. The loan must be genuinely commercial in nature — not a disguised distribution or an attempt to access pension funds early. All interest payments flow back into the pension scheme.
Unconnected loans (third-party development finance)
Loans to unconnected third parties — parties with no connection to the sponsoring employer or its members — are permitted and not subject to the same strict 50% cap that applies to connected loans. The trustees must ensure these loans are made on commercial terms, with appropriate security, and following adequate due diligence on the borrower and the project. See our guide on SSAS for property developers for more detail on this type of investment.
What Are Unregulated Investments?
The term "unregulated" in an investment context does not mean illegal or inherently problematic. It refers to investments that are not regulated under the Financial Services and Markets Act 2000 (FSMA) or equivalent legislation. Regulated investments are typically those where the issuer is subject to FCA oversight — listed shares, authorised investment funds, and similar instruments. Unregulated investments are everything else.
Examples of unregulated investments that SSAS trustees sometimes consider include:
- Unlisted shares: Shares in a private company not listed on any recognised exchange
- Unregulated Collective Investment Schemes (UCIS): Funds that are not authorised by the FCA and are therefore not subject to UCITS rules
- Private loans: Loans to individuals or companies outside of regulated financial frameworks
- Crypto assets: Digital assets such as Bitcoin and other cryptocurrencies, which are not currently regulated financial instruments in the UK
Are unregulated investments permitted in a SSAS?
The absence of FCA regulation does not automatically prohibit an investment from a SSAS perspective. HMRC's investment rules for SSAS focus primarily on the taxable property prohibition (residential property and tangible moveable property) and the connected party rules — not on FCA regulation status. However, unregulated investments present significantly elevated risk considerations that trustees must address.
Risks of Unregulated Investments
Trustees considering unregulated investments should understand the following risks:
No FCA protection
If an unregulated investment goes wrong, the trustees (and scheme members) have no access to the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service. Regulated investments carry statutory protections; unregulated ones do not.
Valuation difficulties
Unlisted shares and other unregulated assets often cannot be valued by reference to a transparent market price. Scheme accounts must include all assets at a fair value, which can be challenging — and disputed — for illiquid, unregulated holdings.
Liquidity risk
Unregulated assets may be difficult or impossible to sell quickly. If scheme members need to access benefits, or if the scheme needs liquidity for other reasons, illiquid unregulated holdings may become a problem.
Fraud risk
HMRC and The Pensions Regulator both publish guidance warning about pension liberation fraud and pension scams, which often involve offers of unusually high-return unregulated investments presented as SSAS-compatible. The Pensions Regulator's guidance is clear: if a proposed investment promises returns significantly above market rates, it should be treated with extreme caution.
Due Diligence Requirements for Trustees
All SSAS trustees have a fiduciary duty to act in the best interests of all scheme members. When considering any investment — particularly non-standard or unregulated ones — this duty requires trustees to undertake appropriate due diligence before committing scheme funds.
A minimum due diligence framework for any non-standard investment should include:
| Due Diligence Area | What to Assess |
|---|---|
| Counterparty identity | Who is the borrower/investee? Verified legal entity, directors, ownership structure. |
| Financial position | Accounts, credit history, ability to service the loan or investment. |
| Security | What collateral is offered? Is it enforceable? Who holds the charge? |
| Exit route | How will the investment be repaid or realised? What is the timeline? |
| Legal documentation | Is the investment properly documented by a qualified solicitor? |
| Regulatory compliance | Does the investment structure comply with HMRC's pension rules? |
| SSAS practitioner review | Has your SSAS practitioner reviewed the proposed investment for compliance? |
The Taxable Property Category
The most important category of prohibited investment for SSAS trustees to understand is "taxable property" — which includes residential property and tangible moveable property. Holding these assets within a SSAS triggers a scheme sanction charge of up to 40% of the investment's value. See our detailed guide on SSAS and residential property rules for a full explanation.
How Trustees Should Assess Investments
When a potential investment is brought to the trustees, a structured assessment process helps ensure decisions are made appropriately and documented correctly.
- Check the HMRC compliance position: Is the proposed investment a type that HMRC permits in registered pension schemes? Is it taxable property? Is it a connected or unconnected party transaction?
- Assess the commercial case: Does the investment make sense on its merits? What is the expected return? What are the risks? Is the investment in the best interests of all members?
- Conduct due diligence: Gather and review all relevant information on the investment, counterparty, and security arrangements.
- Obtain professional input: Instruct a solicitor for legal documentation. Consult your SSAS practitioner on compliance. Consider whether independent valuation is needed.
- Record the decision: Document the trustees' analysis, the due diligence performed, and the rationale for the decision in a formal trustee minute. This record is essential if HMRC ever queries the investment.
If in doubt, don't proceed: Trustees who are uncertain about whether a proposed investment is permitted under HMRC's rules should obtain a formal written opinion from their SSAS practitioner before committing scheme funds. The cost of professional advice is far smaller than the potential scheme sanction charge for a non-compliant investment.
Summary
A SSAS has broad investment powers — listed shares, bonds, commercial property, cash, and both connected and unconnected loans are all permitted within HMRC's rules. Residential property and tangible moveable property are absolutely prohibited as taxable property. Unregulated investments are not automatically prohibited, but they carry elevated risks and require rigorous trustee due diligence. The critical framework for every investment decision is: does this comply with HMRC's rules, is it in the best interests of all scheme members, and is it properly documented?
Frequently Asked Questions
What's the difference between regulated and unregulated SSAS investments?
A regulated investment is one offered or arranged by a firm authorised by the Financial Conduct Authority (FCA) under the Financial Services and Markets Act 2000. An unregulated investment is one outside that perimeter — for example, a direct commercial property purchase, a private loan, or shares in an unlisted company. SSAS schemes can hold both, but the trustee due-diligence burden is higher for unregulated assets.
Are unregulated SSAS investments legal?
Yes — they are explicitly permitted by HMRC’s registered pension rules. The legality of holding an asset in a SSAS depends on the HMRC tax rules (taxable property test), not on whether the asset is FCA-regulated. Commercial property, loans to the sponsoring employer, and unlisted shares are all permitted SSAS investments even though they sit outside the FCA-regulated investment universe.
What protection do I have on SSAS investments?
For regulated investments held through an FCA-authorised firm, the Financial Services Compensation Scheme (FSCS) may cover certain losses up to defined limits. For unregulated investments held directly by the SSAS — commercial property, direct loans, unlisted shares — there is no compensation scheme. The trustees bear full investment risk. This is why the trustee due-diligence process matters so much for unregulated SSAS assets.
Does the FCA regulate SSAS schemes?
No. The Pensions Regulator (TPR) and HMRC oversee SSAS schemes — not the FCA. The scheme administrator firm acting for the SSAS must be HMRC-registered. FCA regulation only applies to the regulated investments held inside the SSAS, not to the scheme itself. This is why the disclaimer on every page of this site notes that SSAS pensions are HMRC-registered and TPR-overseen rather than FCA-regulated.
Can a SSAS invest in unregulated funds?
Yes, subject to scheme administrator approval. Unregulated collective investment schemes (UCIS) are permitted SSAS investments under HMRC rules, but they carry higher liquidity and counterparty risk. Most SSAS administrators have an internal due-diligence process for UCIS investments and may decline particular schemes regardless of HMRC permissibility.
What is HMRC's 'taxable property' test for investments?
Taxable property covers residential property in any form, tangible moveable assets (art, vintage cars, fine wine, jewellery), and certain other categories. Direct or indirect holding of taxable property in a SSAS triggers a scheme sanction charge (up to 40%) plus an unauthorised payments charge (40%) on the member — combined, the tax cost can exceed the asset’s value. The taxable property test is independent of FCA regulation.
Can my SSAS invest in a company my friend runs?
Yes, in principle — loans or share investments in unconnected third-party companies are permitted. The investment must be at arm’s length (commercial terms, independent valuation) and in the best interests of all scheme members. ‘Connected’ for HMRC purposes means family of a member, or a company controlled by members. A friend’s company is normally unconnected, but the trustees should document the absence of personal relationship influence on the investment decision.
Do I need a financial adviser to make SSAS investment decisions?
Not legally — SSAS trustees can make investment decisions themselves. But for transfers in from a defined benefit (DB) pension worth more than £30,000, the law requires the saver to take regulated FCA advice from a Pension Transfer Specialist (Financial Services and Markets Act 2000, s.48). For ongoing SSAS investment decisions, professional advice is optional, but most trustees engage advisers for major decisions like property purchases or unquoted equity investments.
Disclaimer: This article is for educational purposes only. SSAS investment rules are complex and subject to change. Before making any investment decision through a SSAS, consult your scheme practitioner and, where appropriate, seek independent legal and financial advice.